Finances are so dire at the University of California that it might have to turn away qualified students, but UC has still found a way to reward hundreds of employees with more than $4 million in incentive pay and raises.

At the regents meeting Thursday in San Diego, UC officials reported giving rewards of $150 to $41,205 to nearly 1,500 UCSF employees who met performance targets, raising the pay of some campus executives to above market rate, and providing 10 percent raises of about $20,000 a year to three executives at their Oakland headquarters.

The executives, who have various financial responsibilities for the UC system, will earn between $216,370 and $247,500 in base pay.

"Whether a budget crisis or not, the university still has to be able to pay competitive salaries and incentives consistent with industry standards," said Steve Montiel, a spokesman for the university. "The university has no problem paying incentives to be competitive."

The compensation report came one day after UC President Mark Yudof told the regents that UC will need to close a $1 billion budget gap next year. He said layoffs and course reductions are inevitable, and that he expects to have to turn away 20,000 to 30,000 qualified students over the next decade because the university won't have the money to educate them.

Not all public funds

Not all of the money for the payouts comes from taxpayer funds.

Up to 30 percent - about $1.2 million - of the incentive pay for the UCSF employees comes from taxpayer funds, said UCSF spokeswoman Amy Pyle. The rest, at least $2.8 million, comes from a variety of sources, including medical center revenue and parking fees, she said.

Pyle said the rewards were issued because those employees met targets for saving money and streamlining procedures - but that the incentive program for that group has now been suspended because of the budget crisis.

At UC headquarters, about 20 percent of the money for three executives' raises - $12,700 a year - will come from taxpayer funds, said their boss, Peter Taylor, UC's chief financial officer.

Taylor said he gave them a raise in part because he had canceled an annual 10 percent bonus promised in their hiring letters. Beyond that, he said they deserve the extra cash.

One of them, Grace Crickette, UC's chief risk officer, "has saved the university over $100 million by driving down the cost of workers' compensation, negotiating much more advantageous terms with our insurance company," Taylor said. The raises "are a small price to pay for people working at the highest level."

That rationale failed to convince representatives of UC's lowest-paid workers.

"The lowest-paid workers do a lot to save money too, and we've actually told them how. But our workers are being hit" with higher costs for their own benefits, said Lakesha Harrison, president of the American Federation of State, County and Municipal Employees, which represents custodians, groundskeepers, patient-care workers and other employees earning less than $40,000.

Wrong priorities?

"I'm angry at the fact that I think their priorities are wrong," Harrison said.

Although it was true that her union had recently signed a contract giving workers raises of 3 and 4 percent more a year, she said the idea had been to lift them out of poverty because most were eligible for welfare.

But the workers' improved condition was offset in 2010 by steep increases in the cost of health care, a requirement that employees start paying into their pension fund, and a tripling of their contribution into their retiree health care, she said.

Meanwhile, Harrison said it was "just unbelievable" that UC was also spending freely on new, highly compensated employees and giving others raises.

At UC Berkeley, for example, the new vice chancellor for administration and finance will earn a base salary of $375,000 - 9 percent higher than the salary midpoint of $344,000 earned by colleagues at other universities, UC officials reported.

At UCLA, the chief financial officer of the hospital system will receive a 10.5 percent raise, bringing his salary to $420,000 from $380,000 as a hedge against the possibility that he would go somewhere else. The campus called it a "pre-emptive retention salary adjustment."